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The charges reportedly stemmed from the two finance executives' roles in Project Alpha, a 2002 trading and financing scheme that helped the energy company inflate its reported cash flow by as much as $300 million.
Stephen Taub, CFO.com | US
January 6, 2006
Two former members of Dynegy Inc.'s finance team received prison sentences stemming from their roles in the energy company's accounting scandal.
Gene Foster, the former vice president of tax, got 15 months behind bars, three years of probation, and a $1,000 fine, according to The Houston Chronicle. Helen Sharkey, a former member of Dynegy's risk control and deal structure group, will serve 30 days in prison and be required to pay a $10,000 fine immediately.
Sharkey won't be required to report to prison until October because she gave birth to twin boys three weeks ago, according to the Associated Press. After her release, she will be confined at home for six months. "I know this will interfere with your family, but it's the least severe sentence I could in good conscience impose," said U.S. District Judge Sim Lake during the hearing, according to the report.
Denying requests by Foster and Sharkey for probation, Lake declared that "some harm" should be "visited on people who commit serious crimes," according to the AP.
Foster, Sharkey, and Jamie Olis, Dynegy's former senior director of tax planning, had each been charged with conspiracy, securities fraud, mail fraud, and wire fraud. The allegations stemmed from their roles in Project Alpha, a 2002 gas-trading and financing scheme that helped Dynegy inflate its reported cash flow by as much as $300 million, according to the Chronicle.
Lake delayed the resentencing of Olis, the only one of the three defendants who had agreed to go to trial. In November 2003, Lake sentenced Olis to 24 years in prison after he was found guilty on six counts, according to the Chronicle. But that sentence was overturned by the 5th U.S. Circuit Court of Appeals. Olis is likely to receive a minimum of nearly six years, according to the AP. The resentencing was postponed to enable defense and prosecution experts to testify about how much of investors' losses should be attributed to Olis.
Prosecutors assert that Olis is responsible for $20 million to $50 million in losses, according to the wire service. Sentencing guidelines reportedly suggest a 15-year prison term for such losses. For his part, Olis's attorney David Gerger contends that his client's responsibility is overstated, arguing that Dynegy's troubles throughout 2002 depressed its stock price.
By pleading guilty in 2003, Foster and Sharkey received assurances that they would not serve more than five years in prison, according to the AP. Prosecutors had sought two and a half years for Foster and 18 months for Sharkey.